Options as a Strategic Investment

Options as a Strategic Investment

by Lawrence G. McMillan


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The market in listed options and non-equity option products provides investors and traders with a wealth of new, strategic opportunities for managing their investments. This updated and revised Fifth Edition of the bestselling Options as a Strategic Investment gives you the latest market-tested tools for improving the earnings potential of your portfolio while reducing downside risk—no matter how the market is performing.

Inside this revised edition are scores of proven techniques and business-tested tactics for investing in many of the innovative new options products available. You will find:

•Buy and sell strategies for Long Term Equity Anticipation Securities (LEAPS)
•A thorough analysis of neutral trading, how it works, and various ways it can improve readers’ overall profit picture
•Detailed guidance for investing in Preferred Equity Redemption Cumulative Stocks (PERCS) and how to hedge them with common and regular options
•An extensive overview of futures and futures options

Written especially for investors who have some familiarity with the option market, this comprehensive reference also shows you the concepts and applications of various option strategies -- how they work, in which situations, and why; techniques for using index options and futures to protect one’s portfolio and improve one’s return; and the implications of the tax laws for option writers, including allowable long-term gains and losses. Detailed examples, exhibits, and checklists show you the power of each strategy under carefully described market conditions.

Product Details

ISBN-13: 9780735204652
Publisher: Penguin Publishing Group
Publication date: 08/07/2012
Pages: 1072
Sales rank: 108,175
Product dimensions: 7.90(w) x 9.30(h) x 2.36(d)
Age Range: 18 Years

About the Author

Lawrence G. McMillan is a professional trader and the author of the bestselling Options as a Strategic Investment. He appears regularly on CNBC and Bloomberg TV, and is the recipient of the prestigious Sullivan Award due to his contribution to the growth and integrity of the US options markets. He is founder and president of McMillan Analysis Corporation.

Table of Contents

Pt. 1 Basic Properties of Stock Options 1
Ch. 1 Definitions 3
Pt. 2 Call Option Strategies 29
Ch. 2 Covered Call Writing 31
Ch. 3 Call Buying 85
Ch. 4 Other Call Buying Strategies 105
Ch. 5 Naked Call Writing 119
Ch. 6 Ratio Call Writing 129
Ch. 7 Bull Spreads 154
Ch. 8 Bear Spreads Using Call Options 167
Ch. 9 Calendar Spreads 172
Ch. 10 The Butterfly Spread 181
Ch. 11 Ratio Call Spreads 191
Ch. 12 Combining Calendar and Ratio Spreads 203
Ch. 13 Reverse Spreads 211
Ch. 14 Diagonalizing a Spread 217
Pt. 3 Put Option Strategies 225
Ch. 15 Put Option Basics 227
Ch. 16 Put Option Buying 238
Ch. 17 Put Buying in Conjunction with Common Stock Ownership 253
Ch. 18 Buying Puts in Conjunction with Call Purchases 261
Ch. 19 The Sale of a Put 273
Ch. 20 The Sale of a Straddle 282
Ch. 21 Synthetic Stock Positions Created by Puts and Calls 301
Ch. 22 Basic Put Spreads 309
Ch. 23 Spreads Combining Calls and Puts 316
Ch. 24 Ratio Spreads Using Puts 332
Ch. 25 LEAPS 341
Ch. 26 PERCS 384
Pt. 4 Additional Considerations 405
Ch. 27 Buying Options and Treasury Bills 407
Ch. 28 The Best Strategy? 416
Ch. 29 Arbitrage 422
Ch. 30 Mathematical Applications 457
Pt. 5 Index Options and Futures 491
Ch. 31 Introduction to Index Option Products and Futures 493
Ch. 32 Stock Index Hedging Strategies 533
Ch. 33 Index Spreading 581
Ch. 34 CAPS 606
Ch. 35 Mathematical Considerations for Index Products 644
Ch. 36 Futures and Futures Options 654
Ch. 37 Futures Options Strategies for Futures Spreads 702
Ch. 38 Advanced Concepts 727
Ch. 39 Taxes 804
Postscript 828
Pt. 6 Appendices831
Appendix A: Strategy Summary 833
Appendix B: Equivalent Positions 835
Appendix C: Formulae 837
Appendix D: Graphs 847
Appendix E: Qualified Covered Calls 850
Glossary 853
Index 872

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Options as a Strategic Investment 4 out of 5 based on 0 ratings. 1 reviews.
Guest More than 1 year ago
I got my introduction to equities options on the CBOE floor in 1986. McMillan's book (the original hard cover) was required reading for every newcomer on the floor. This updated version is the best reference work you will find on options; if you want investing strategies get his other book, but this is still the one and only 'bible'